Fannie Mae 2012 Annual Report Download - page 203

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the named executive left the company prior to this date, the amount of earned but unpaid fixed deferred salary received by the
named executive would be reduced by 2% for each full or partial month by which the executive’s separation date preceded
January 31, 2014. Under the original terms of the 2012 executive compensation program, the January 31, 2014 date by which
a named executive’s deferred salary would be fully vested was applicable not only to 2012 fixed deferred salary but also to
fixed deferred salary earned for 2013 and subsequent performance years.
On March 27, 2013, FHFA directed us to revise the 2012 executive compensation program so that, effective for 2013 and
subsequent performance years, earned but unpaid fixed deferred salary will be reduced by 2% for each full or partial month
by which the named executive’s separation date precedes January 31 of the second year following the performance year.
Accordingly, for 2013 and each subsequent performance year, the vesting schedule for earned but unpaid fixed deferred
salary will restart each year and earned but unpaid fixed deferred salary will not be fully vested until January 31 of the second
year following the performance year. For example, the amount of earned but unpaid fixed 2013 deferred salary received by a
named executive if he or she left the company (other than due to termination for cause) would be reduced by 2% for each full
or partial month by which the executive’s separation date preceded January 31, 2015. FHFA made this change to the 2012
executive compensation program in order to maintain the retention feature of fixed deferred salary for 2013 and subsequent
performance years.
2013 Performance Goals
As described under “2012 Executive Compensation Program—Elements of 2012 Executive Compensation Program—Direct
Compensation,” half of the named executives’ at-risk deferred salary is subject to reduction based on corporate performance
as determined by FHFA. The remaining half of at-risk deferred salary is subject to reduction based on individual performance
as determined by the Board of Directors with FHFA’s approval.
On March 4, 2013, the Acting Director of FHFA released 2013 corporate performance goals and related targets for Fannie
Mae and Freddie Mac, referred to as the 2013 conservatorship scorecard. The company’s performance against the 2013
conservatorship scorecard, as determined by FHFA with input from management and the Board of Directors, will determine
the amount of the corporate-performance based component of the named executives’ 2013 at-risk deferred salary. See our
Current Report on Form 8-K filed with the SEC on March 8, 2013 for a description of the 2013 conservatorship scorecard.
On March 28, 2013, our Board of Directors adopted the following additional performance goals for 2013, referred to as the
2013 Board of Directors goals. Performance against the 2013 Board of Directors goals will be a factor that the Board of
Directors considers in determining the individual performance of the named executives for purposes of the individual
performance-based component of the named executives’ 2013 at-risk deferred salary.
1. Achieve key financial targets, including acquiring and managing a profitable, high-quality book of new business from
2009 forward. Metrics associated with this goal consist of generating projected returns in excess of our cost of capital on
our 2013 single-family and multifamily acquisitions, managing our businesses within Board risk limits, and limiting our
core administrative expenses for 2013.
2. Serve the housing market by being a major source of liquidity, effectively managing our legacy book of business and
assisting troubled borrowers. Metrics associated with this goal consist of reducing the number of our seriously
delinquent single-family loans and meeting our obligations as program administrator of the Department of the Treasury’s
Making Home Affordable Program.
3. Improve the company’s risk, control and compliance environment. Most of the metrics associated with this goal seek to
address various risk, control and compliance matters raised by FHFA or Internal Audit. Other metrics associated with this
goal consist of accomplishing specified 2013 enterprise risk management goals and meeting the 2013 milestones relating
to the implementation of two safety and soundness initiatives (a new loan accounting platform and a new data center).
4. Improve the company’s capabilities, infrastructure and efficiency. Metrics associated with this goal consist of achieving
specified 2013 investment plan goals (including maintenance projects), and developing and meeting the 2013 milestones
of a human capital plan.
The Board expects these goals to be accomplished within the risk, control and compliance framework set forth in the third
objective listed above.